Alexander Hendrie

Americans for Tax Reform President Grover Norquist, together with a coalition of 31 other conservative, free market leaders and organizations today urged Congress to pass pro-growth tax reform in 2017.

In the letter, addressed to House Speaker Paul Ryan (R-Wis.) and Ways and Means Chairman Kevin Brady (R-Texas), the coalition urges significant progress to be made in the first hundred days of the Trump administration:

“Given the importance of this issue, we believe it is imperative that the House of Representatives make significant progress in the first hundred days of the Trump administration toward passing comprehensive, pro-growth tax reform.

“Passage of tax reform that simplifies and updates the code is key toward encouraging economic growth, creating more jobs and higher wages, and promoting innovation and ingenuity. The release of your ‘Better Way’ tax reform blueprint last year was the first step in achieving this important goal, and we encourage you to continue working to ensure tax reform becomes a reality.”

Pro-growth tax reform should lower rates for families and businesses across the board, simplify the byzantine code, ensures small businesses and corporations can compete, and make lasting, permanent changes to law.

The Honorable Paul D. Ryan Speaker of the House U.S. House of Representatives H-232, The Capitol Washington, D.C. 20515

The Honorable Kevin BradyChairman, Committee on Ways and MeansU.S. House of Representatives1102 Longworth House Office BuildingWashington, D.C, 20515

Dear Speaker Ryan & Chairman Brady:

On behalf of the undersigned organizations, we write in support of your efforts to pass pro-growth tax reform into law in 2017.

Given the importance of this issue, we believe it is imperative that the House of Representatives make significant progress in the first hundred days of the Trump administration toward passing comprehensive, pro-growth tax reform.

Passage of tax reform that simplifies and updates the code is key toward encouraging economic growth, creating more jobs and higher wages, and promoting innovation and ingenuity. The release of your “Better Way” tax reform blueprint last year was the first step in achieving this important goal, and we encourage you to continue working to ensure tax reform becomes a reality.

As you know, it has been more than 30 years since comprehensive tax reform was last signed into law. Since then, our foreign competitors have drastically reduced their rates, simplified their codes, and updated their systems to be globally competitive. Meanwhile, our tax code has almost tripled in size and has failed to keep pace with the norms of global tax competition.

Tax reform should be viewed as an opportunity to reduce rates for all taxpayers while also repealing many of the discriminatory and preferential provisions in the code in favor of a broader base. Lawmakers also ought to repeal a number of unnecessary taxes like the Death Tax and the Alternative Minimum Tax, which only add to the complexity of the system.

On the business side, tax reform should ensure our small businesses and corporations can compete against foreign competitors, while also ending the confusing, arbitrary system of depreciation in favor of immediate, full expensing of business investments.

Where possible, changes to the tax code should be permanent changes to law. When lawmakers have enacted short-term tax legislation in the past, it has inevitably come under threat in the future by legislators that want to increase the scope and size of government through higher taxes. In contrast, permanent legislation will give families and businesses much-needed certainty and will help contribute to a stronger economy.

Today, pro-growth tax reform is needed more than ever. It is imperative that lawmakers prioritize an overhaul of the tax code in 2017 and make significant progress in the first hundred days of the Trump administration.

America’s archaic, overly complex tax code makes it difficult – if not impossible – for U.S. businesses to compete with foreign competitors. We need revenue neutral, pro-growth tax reform to address this problem and reverse the trends of insufficient growth, too few jobs, and stagnant wages.

One reason for the American competitiveness problem is that the US is the only modern country without a border adjustment mechanism. Countries “border adjust” by applying equal, offsetting taxes on imports and tax breaks on exports. This allows countries to tax based on where the product is consumed, but the lack of a US border adjustment system results in a significant competitive disadvantage for American businesses.

Normally, when a product leaves one country, the border adjustment mechanism adjusts rates downward which is then offset when it enters the new country which border adjusts rates upwards. Neither country is imposing a tariff here. Rather they are taxing based on where the product is consumed.

Because the US does not have a border adjustment, American businesses that export overseas face a penalty relative to transactions between two countries with border adjustable systems – there is no border adjustment downward when the product is exported to offset the upward border adjustment when the product is imported. Similarly, foreign businesses importing into the U.S. receive a tax break compared to transactions between two other developed nations, because they do not have a border adjustment up when sending products into the U.S.

This problem is not limited to a few of America's trading partners. The U.S. is the only nation without border adjustment among the 35-member Organisation for Economic Co-operation and Development (OECD) and the five country BRICS (Brazil, Russia, India, China and South Africa). The U.S. system is so antiquated that the only countries without a border adjustment are nations like North Korea, South Sudan, Iraq, Myanmar, and Western Sahara.

While the border adjustment in the House GOP “Better Way” blueprint may sound like a tariff or a Value-Added tax, in reality it is neither. It is part of a modern, internationally competitive cash-flow business tax that replaces the cumbersome corporate income tax used today.

If lawmakers want American businesses to be able to compete, they must fix this outdated, uncompetitive system. They can do this by passing tax reform along the lines of the House blueprint.

As further evidence of how ignorant Sen. McCaskill is about the contents of the law,Obamacare imposed roughly one trillion dollars ($1,000,000,000,000) in higher taxes over ten years that directly and indirectly hit middle class families and businesses.

The law imposes a tax for failing to buy government-mandated insurance, imposes taxes on the millions of Americans using Health Savings Accounts and Flexible Spending Accounts, imposes an income tax hike on Americans facing high medical bills, imposes a new tax on health insurance, a tax on medical devices, a tax on employer provided care, and a tax on innovative medicines and other treatments.

Repealing these taxes will provide much needed relief to the paychecks of families across the country. Repealing Obamacare will also undo Barack Obama’s broken promise not to sign “any form of tax increase” on any middle class American family.

Anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services -- must pay an income surtax to the IRS. In 2014, close to 7.5 million households paid this tax. Most make less than $250,000. The Obama administration uses the Orwellian phrase “shared responsibility payment” to describe this tax.

Starting this year, the tax was a minimum of $695 for individuals, while families of four had to pay a minimum of $2,085.

Households w/ 1 Adult

Households w/ 2 Adults

Households w/ 2 Adults & 2 children

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

A recent analysis by the Congressional Budget Office (CBO) found that repealing this tax would decrease spending by $311 billion over ten years.

The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. This tax will hit Americans $32 billion over the next ten years.

The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. This tax will hit Americans $32 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children. Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

Health Insurance Tax ($130 billion tax hike between 2016-2025)

In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax. The tax is projected to cost taxpayers – including those in the middle class – $130 billion over the next decade.

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums collected from certain plans each year. While it is directly levied on the industry, the costs of the Obamacare health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

Chronic Care Tax ($35.7 billion tax hike between 2016-2025)

This income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income. This income tax increase will cost Americans $40 billion over the next ten years.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family claiming this tax benefit is about $200 - $400 per year.

In 2020, a new 40 percent excise tax on employer provided health insurance plans is scheduled to kick in, on plans exceeding $10,200 for individuals and $27,500 for families. According to research by the Kaiser Family Foundation, the Cadillac tax will hit 26 percent of employer provided plans and 42 percent of employer provided plans by 2028. Over time, this will decrease care and increase costs for millions of American families across the country.

HSA Withdrawal Tax Hike ($100 million tax hike between 2016-2025)

This provision increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

The Obamacare 10 percent tanning tax has wiped out an estimated 10,000 tanning salons, many owned by women. This $800 million Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. There is no exception granted for those making less than $250,000 meaning it is yet another tax that violates Obama’s “firm pledge” not to raise “any form” of tax on Americans making less than this amount.

As President Trump and Congress ramp up discussions on what comprehensive tax reform should look like, they ought to be able to agree that reducing, not raising, the tax burden on badly-needed investment is a top priority. That's the opinion of two of Washington's most prominent taxpayer groups, which today urged leaders on both ends of Pennsylvania Avenue to get an early start on publicly declaring tax-reform principles that encourage investment, among them ensuring that all types of capital gains are treated fairly, without harsh or discriminatory exceptions in the law.

Grover Norquist, Founder and President at Americans for Tax Reform, and Pete Sepp, President of National Taxpayers Union, offered the following statement ahead of GOP's policy retreat, where tax reform is expected to be the topic of in-depth discussions:

"The next four years represents an opportunity to reduce -- not increase taxes on capital gains. Over the past eight years, the top rate increased from 15 percent to 23.8 percent, and the top integrated rate currently sits at 56.3 percent compared to the OECD/BRIC average of 40.3 percent.

While it appears unlikely that incoming lawmakers and the administration will increase rates outright, they should also be sure not to incrementally move the needle toward higher capital gains taxes in other ways, like boosting taxes on carried interest capital gains.

Carried interest capital gains income is earned through a net gain within a partnership formed between individuals with capital and an expert investor. They are indistinguishable from any other type of capital and so they are paid at the same capital gains tax rates.

While supporters of higher taxes on carried interest capital gains say it takes aim at 'hedge fund guys,' it would also hurt pension funds, charities, and colleges that depend on these investment partnerships as part of their savings goals. In addition, small businesses would find themselves increasingly shut out from investment money available to them from these partnerships.

Rather than supporting proposals that lead to higher capital gains tax rates, the incoming Congress and administration should look toward lower rates. One model to follow is contained in the House GOP blueprint, which reduces the top rate on capital gains to 16.5 percent."

ATR is a nonpartisan taxpayer advocacy group, and sponsors the Taxpayer Protection Pledge. NTU is a pro-taxpayer lobbying organization working for lower, simpler taxes and economic freedom at all levels.

ATR President Grover Norquist today sent a letter of support for Congressman Mick Mulvaney (R-S.C.) for the position of Director of the Office of Management and Budget. Read the letter here or below.

Dear Chairman Enzi & Ranking Member Sanders,

I write in support of Congressman Mick Mulvaney for the position of Director of the Office of Management and Budget. Throughout his time in Congress, Rep. Mulvaney has displayed a commitment to addressing Washington’s rampant overspending problem and reforming the bloated federal bureaucracy. Senators should have no hesitation supporting his nomination to lead OMB and should swiftly approve him to this position.

The federal budget is on an unsustainable trajectory that must be addressed. In coming decades, spending and debt are projected to rapidly increase to historically high levels. The Director of OMB will play an integral part in reining in the out-of-control federal government and Rep. Mulvaney has proven he is willing to make the tough choices that will undoubtedly be required to reverse the looming fiscal crisis.

As an advocate of bringing the Department of Defense under full audit, Rep. Mulvaney has shown a willingness to look for waste and abuse wherever it may be.

As a signer of the Taxpayer Protection Pledge – a commitment made to his constituents to oppose any and all new tax increases – Rep. Mulvaney has shown he understands the need to reduce spending and the deficit without burdening American families and businesses with higher taxes.

Congressman Mick Mulvaney is the right choice to lead OMB at a time when the federal budget is in desperate need of restraint. I urge you and your colleagues to swiftly approve his nomination as Director of OMB.

ATR President Grover Norquist today sent a letter of support for Congressman Tom Price (R-Ga.) for the position of Secretary of the Department of Health and Human Services. Read the full letter here or below.

Dear Chairman Hatch & Ranking Member Wyden:

I write in support of Congressman Tom Price for the position of Secretary of the Department of Health and Human Services. Throughout his career in public office, Dr. Price has proven to be an advocate for pro-growth, fiscally responsible reforms, a champion of patient-centered, free market healthcare, and a supporter of ending Washington dysfunction and gridlock. All Senators should vote to confirm Rep. Price as to lead HHS.

As Chairman of the House Budget Committee, Dr. Price has released fiscally responsible proposals that address Washington’s overspending problem and reduce the deficit without burdening American families and businesses with higher taxes.

Dr. Price has also made it a priority to fix Washington’s gridlock and political dysfunction. Dr. Price last year released a detailed proposal to reform the broken federal budget process by replacing the 1974 Budget Act with reforms to reassert Congressional authority over the federal budget, establish enforceable benchmarks to rein in the deficit, and reverse the bias toward unaccountable spending.

As a member of the House Ways and Means Committee, Dr. Price has advocated for conservative, pro-growth tax reform. Dr. Price is a signer of the Taxpayer Protection Pledge, a commitment he has made to his constituents to oppose any and all new tax increases.

Over the last eight years, Dr. Price has conducted important oversight over the Obama administration. Most notably, Dr. Price last year led oversight efforts over Centers for Medicare and Medicaid Innovation (CMMI), which used its broad authority to unilaterally change to healthcare policy despite opposition from doctors, patients, and lawmakers on both sides of the aisle.

In addition to oversight over Obamacare, Dr. Price has also shown leadership in proposing free market solutions. Rep. Price is the author of the “Empowering Patients First Act,” legislation that replaces Obamacare with a series of reforms that lowers costs, increases efficiency, and empowers patients and doctors across the country.

Congressman Tom Price has a proven record fighting for lower taxes, responsible spending, free market healthcare, and an accountable federal government. Senators should have no hesitation supporting his nomination to lead HHS and should swiftly approve him to this position.

Possible Prescription Drug Importation Amendments Are Not the Solution to Reducing Prices

The Senate is expected to soon vote on S.Con.Res.3, a budget resolution providing for repeal of Obamacare. This “repeal resolution” is step one in undoing the legacy of broken promises under the Barack Obama presidency which have led to higher healthcare costs, cancelled plans, lost doctors, and more than one trillion ($1,000,000,000,000) in tax increases which hit American families and small businesses.

This is a huge win for taxpayers, and should be supported by all Senators. During consideration of the repeal resolution, it is expected that Senators will also offer a number of amendments during consideration of the repeal resolution with the aim of distracting and delaying the process. One example of this is a series of introduced amendments that call for the importation of market distorting price controls on prescription medicines.

Members of the Senate should vote “no” on any importation amendments – and many of the other amendments expected to be offered during consideration of the repeal resolution. The purpose of this budget resolution is to allow for an expedited process to repeal Obamacare through budget reconciliation. More time wasted on amendments threatens the entire process of repealing Obamacare.

Importation schemes are not the solution to lower prices or a more efficient healthcare system. Instead, they would disrupt the system of medical innovation and increase long-term costs through the domino effect of fewer life-saving and life-preserving medicines. These amendments are simply an attempt by some Senators to play political games by proposing a seemingly free market way to reduce prescription drug prices.

The truth is, allowing importation of prescription medicines is not pro-free trade. Almost every other country in the world has excessive price controls on medical innovation. Prices are not determined by the free market but by politicians offering voters seemingly cheap medicines. In turn, allowing importation of a drug also means for the importation of the price controls.

This is the opposite of free trade. Free trade means transparent prices with no tariffs, barriers, or price controls. The U.S. is one of the few countries that allow drug prices to be (mostly) set by the free market, and is also a leader in medical innovation. Reversing this trend by allowing ill-thought out importation policies will hurt American innovators which pour billions of dollars each year into creating new innovative medicines that result in substantial long-term savings for our healthcare system.

The Senate will soon vote on a repeal resolution that will lead to a giant tax cut for American families and small businesses. This is a huge win.

Members should not dilute or threaten this win by passing amendments that slow or endanger the process, especially those that promote dangerous, anti-free market policies like importation of price controls on prescription medicines.

Passage of Repeal Resolution is First Stage in Passing A Trillion Dollar Tax Cut

Congress is expected to soon vote on S.Con. Res. 3, a budget resolution providing for repeal of Obamacare. The “repeal resolution” is step one in undoing the legacy of broken promises under the Barack Obama presidency which have led to higher healthcare costs, cancelled plans, lost doctors, and more than $1 trillion in tax increases which hit millions of middle class families.

All members of the House and Senate should vote “yes” on the repeal resolution. The record of Obamacare is one of broken promises and failed policies. Poll after poll has shown the law is unpopular with the American people. Republicans campaigned on repealing Obamacare and this resolution will allow them to fulfill that promise.

Members of the Senate should also vote “no” on the numerous amendments expected to be offered during consideration of the repeal resolution. The purpose of this budget resolution is to allow for an expedited process to repeal Obamacare through budget reconciliation. These amendments will slow down the process and are largely an attempt for members to play political games.

Passing the repeal resolution will allow members of Congress to pass the first of many tax cuts over the next four years by repealing the more than $1 trillion in higher taxes over a decade. Obamacare’s tax hikes directly hit middle class families, in violation of President Obama’s “firm pledge” not to raise any tax on any family earning less than $250,000 per year. Passing the repeal resolution will allow members of Congress the opportunity to pass the first of many tax cuts over the next four years by repealing these taxes.

The Obamacare law imposed taxes on Health Savings Accounts and Flexible Spending Accounts and imposed an income tax increase on Americans with high medical bills. Obamacare levied a new tax on health insurance, a tax on medical devices, a tax on employer provided care, a steep “indoor tanning tax” and even a tax for not buying “qualifying” government-mandated insurance.

Passing the repeal resolution will also allow Congress to undo a long list of wasteful subsidies including the risk corridor and reinsurance programs as well as the Prevention and Public Health slush fund. Each of these programs and agencies have seen billions in taxpayer dollars wasted on partisan activities at a time when the federal government already spends far too much.

Support for S.Con. Res. 3 is the first step toward enacting a conservative, patient-centered, fiscally responsible healthcare system and eliminating the broken promises, wasteful spending, and higher taxes of the Obama years.

President-elect Donald J. Trump, House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) have all promised repeal of Obamacare will come in early 2017. As part of this commitment made to the American people, they must repeal the Obamacare tax on health insurance and all of Obamacare’s one trillion in higher taxes.

Obamacare contains numerous taxes that directly impact middle class families including taxes on Health Savings Accounts and Flexible Spending Accounts, an income tax increase on high medical bills, and even a tax for failing to buy “qualifying” health insurance – as defined by the federal government.

In addition, Obamacare directly increases the cost of healthcare through the health insurance tax. This tax is projected to cost taxpayers – particularly those in the middle class – $130 billion over the next decade.

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it was suspended in 2017, the tax will total $14.3 billion in 2018 and will increase in subsequent years. Those effects will start to be felt in the next several weeks as businesses start to renew coverage that will extend into 2018.

While the negative impacts of the Obamacare health insurance tax are partially obscured from taxpayers, it undoubtedly hurts the economy and disproportionately impacts middle class families and small businesses. If lawmakers are serious about upholding their commitment to eliminating Obamacare, they must repeal the health insurance tax together with the nearly 20 other Obamacare taxes early in 2017.

Obamacare’s Health Insurance Tax is Bad Policy

Ideal tax policy should meet several criteria. One goal should be for taxes to be applied with a broad base so as not to pick winners and losers. This allows economic decisions to be made with the fewest distortions present which in turn promotes the efficient allocation of capital and creation of jobs.

On this measurement, the Obamacare health insurance tax fails. Not only is it levied in the form of a discriminatory excise tax on one product, the health insurance tax falls only on fully insured plans and thus exempts large corporations and labor unions who are almost universally self-insured.

Tax policy should also be transparent so that taxpayers – and voters – are fully aware and able to make educated decisions on the cost and size of government. If a certain tax is obscured from the view of taxpayers, it is far easier for politicians to raise that tax without any accountability.

On transparency, the health insurance tax fails too. Because the costs of the health insurance tax are baked into health insurance premiums the negative impacts of the tax are obscured.

The Costs of the Tax are Passed on to the Middle Class, Seniors and the Poor

Despite its indirect nature, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, and middle class families through higher premiums. In addition, the tax impacts the care received by seniors through Medicare advantage coverage and low-income Americans that rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs.

Typically, small businesses purchase insurance through the small group insurance market, while larger employers have the scale to provide healthcare through self-insured plans, which are excluded from this tax.

Because it falls disproportionately on small businesses, the health insurance tax hits a key driver of American growth and jobs.

Small businesses account for half of all jobs in the US and two-thirds of new jobs in recent decades so this tax will mean businesses across the country can spend less investing in new equipment, hiring new workers, or providing higher wages.

One estimate, conducted by the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and reduce small businesses sales by $33 billion through 2023.

The Congressional Task Force on Economic Growth in Puerto Rico yesterday released its recommendations to lawmakers. Most importantly, the report acknowledged the need to implement tax policy that encourages and strengthens investment, jobs, and economic growth.

While legislation passed earlier this year by Congress addressed the short-term debt crisis of Puerto Rico, more needs to be done over the long term to ensure the island can recover and thrive. Moving forward, any solution to Puerto Rico's economic woes must include permanent, pro-growth tax policies that encourage competition and investment as acknowledged in the report.